SECU Buys Second Chance Student Loans
The Raleigh, N.C.-based credit union inaugurated the program with a $25 million cap in June 2012, according to the credit union’s Chief Financial Officer Mike Lord.
SECU committed to purchase an additional $25 million worth of the currently defaulted student loans from the North Carolina State Education Assistance Authority’s Loan Rehabilitation Program, bringing its cap to $50 million.
The program gives student borrowers with defaulted federally backed student loans a second chance to repay the loans, repair their credit history and continue their education by successfully completing the program.
Under the loan program’s qualifications, once the borrower makes nine consecutive voluntary monthly payments at an amount they can sustain into the future, the authority restores their loan to good standing and they may begin new repayment terms. In addition, the authority reinstates the borrower’s eligibility for federal and state financial aid and removes the defaulted loan status from the participant’s credit record.
Lord pointed out that the federal government guarantees the loans making their risk quite low and that the credit union does not have to service the loans.
“It’s much like an investment in mortgages or any other type of loan,” he said. “We just like to do it because while the amount of money is not great in the scheme of things, it’s very important.”
“As many students struggle to repay their loans, it’s wonderful to have access to capital for the program’s rehabilitation process that offers borrowers an opportunity to demonstrate their desire and willingness to bring their loan and credit to good standing,” said Dr. Steve Brooks, executive director of the North Carolina State Education Assistance Authority. “We are grateful to State Employees’ Credit Union for their support and increased investment of $25 million, making it possible to help students looking for a fresh start regain a foothold on their educational and financial goals.”
Lord added, “As a not-for-profit financial cooperative, State Employees’ Credit Union continually seeks solutions to help members experiencing financial hardships. SECU’s ongoing support of the Loan Rehabilitation Program to help North Carolina students looking to repay their debt and repair their credit reinforces that commitment. A second chance through this Program allows students to recover from difficult financial barriers, providing more opportunity to improve their overall economic future.”